Seeking Alpha

Sugar the new tobacco? Bottled water to soon surpass soft drinks

  • "I've never seen anything like it," says Beverage Marketing Corporation chief Michael Bellas, as bottled water continues to grab market share from soft drinks. Coca-Cola (KO) and Pepsi (PEP) have obviously noticed and cary their own bottled water lines, but these are low margin. Both have failed to gain much traction in the more profitable business of so-called enhanced waters.
  • Nearly 90% of doctors globally tie the epidemics of type II diabetes and obesity to excess sugar consumption, according to a loud new Credit Suisse report, titled, "Is Sugar Turning The Economy Sour?"
  • Sugar - and its cousin high fructose corn syrup - can be found in pretty much every single item of processed food available nowadays, but the biggest villain is soft drinks, with CS estimating 43% of added sugars in our diets coming from sweetened beverages. "Recent research shows that as the sugar is in a solution, it is easily and completely ingested, giving a large injection of calories without the consequential feeling of being full." The good news (or bad news if you own a purveyor of sugar) is the public is catching on - though this varies significantly by demographic.
  • Public policy is catching on too, with Credit Suisse - in a nod to tobacco - noting sugar "meet(ing) the criteria for being a potentially addictive substance." Mexico (not Bloomberg's NYC) may provide the first test case as the President has proposed a tax on sales of sugary drinks.
  • More on the CS report and sugar from Izabella Kaminska.
Comments (61)
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    I have relatives who became diabetic and it wasn't because of soda. Many elderly people don't drink soda at all. And pre-school children get type 1 diabetes and I doubt the parents feed them soda. Obviously this is an illness that instead of fighting with cures, governments are just looking for money. Mexico should tax all their drugs and prostitution first. Why tax people who are not doing anything illegal? If you think soda is as addictive as drugs, you are crazy. Are you going to tax my coffee next? If every person who did something illegal was fined instead of incarcerated, no government would be in debt.
    26 Oct 2013, 09:24 AM Reply Like
  • Phill Stone
    , contributor
    Comments (78) | Send Message
     
    "I have relatives who became diabetic and it wasn't because of soda."

     

    so?

     

    "Obviously this is an illness that instead of fighting with cures, governments are just looking for money."

     

    Pretty sure the 'cure' is to not drink/consume/ingest as much sugar as the public has been, which is the point of the part of the article saying Mexico is looking to tax it. Side note, kinda hard to tax illegal activities.

     

    "Why tax people who are not doing anything illegal?"

     

    So something needs to be illegal before it should be taxed...?

     

    "If you think soda is as addictive as drugs, you are crazy."

     

    does it need to be 'as addictive as drugs' (btw, which drugs exactly?) in order to be bad? Also, you clearly haven't seen a hardcore soft-drinker who downs multiple glasses in a sitting. Sorry but it sure seems like a drug in that point and time..

     

    "If every person who did something illegal was fined instead of incarcerated, no government would be in debt."

     

    Really? So if person A sells crack to person B's kids, let's just fine them? How much would that fine be exactly to make it "right" ? What about for murder? 17 bucks... 3000... 1.2 million? Your ideas are pretty ridiculous honestly.
    26 Oct 2013, 09:53 AM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (551) | Send Message
     
    Type I and Type II diabetes are different animals and the issue with respect to sugar and obesity is its link to Type II. As far as I know there is no link between sugar consumption/weight and the onset of Type I.
    26 Oct 2013, 10:01 AM Reply Like
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    Weight loss is a symptom of diabetes, both type 1 and type 2. This is something the media never says because they would rather attack the victim's habits than to focus on the problem of diseases that have not been cured.
    26 Oct 2013, 10:35 AM Reply Like
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    Honestly you need help.
    26 Oct 2013, 10:37 AM Reply Like
  • CassandraSees
    , contributor
    Comments (395) | Send Message
     
    Moderation is a difficult lesson to learn and Americans would do well to look to other cultures that understand it - - Sugar is just one of the many problems with our lifestyle and the diet that we eat from day to day - - A government law will not make you healthy - - You have to do your own research and be responsible for your own health .....Self responsibility...such a lost art....
    26 Oct 2013, 11:51 AM Reply Like
  • James Sands
    , contributor
    Comments (2429) | Send Message
     
    Phill,

     

    Anything can become a "drug". It has more to do with emotional/psychological issues, which rarely relate to the agent of coping mechanism.

     

    If a person eats at McDonalds 7 times a day, the issue isn't McDonalds. The issue is most likely related to an event or sequence of events triggering abnormal behavior characteristics.

     

    Today's choices that people make relate to stressful and most often unsustainable lifestyles. This is a major contributing factor leading to misguided ideas of entitlement.

     

    If there are no extreme events or undue traumatic experiences, there is no justification for a sense of entitlement. One only needs to look in the mirror and face the facts.
    26 Oct 2013, 01:34 PM Reply Like
  • june1234
    , contributor
    Comments (3150) | Send Message
     
    Bottled water giant Evian is spelled Naive backwards.
    26 Oct 2013, 10:04 AM Reply Like
  • Ray Lopez
    , contributor
    Comments (1602) | Send Message
     
    Not only that, the BBC last week did an article that says the studies that say you need 3 liters or more of water every day are funded by bottled water companies. You actually only need to drink when you are thirsty. Most people hydrate too much, which in the extreme can be dangerous to your health.
    28 Oct 2013, 01:59 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    Ray
    That's incorrect many diseases do not trigger a thirst response.
    former army medic
    28 Oct 2013, 07:56 AM Reply Like
  • june1234
    , contributor
    Comments (3150) | Send Message
     
    Bottled water giant Evian is spelled Naive backwards
    26 Oct 2013, 10:10 AM Reply Like
  • chopchop0
    , contributor
    Comments (3876) | Send Message
     
    KO's share price has been feeling this, way more so than PEP thanks to a lack of diveristy outside of drinks
    26 Oct 2013, 10:11 AM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2737) | Send Message
     
    Bottled water will be a GREAT investment until the FDA loonytunes point out that
    (1) most of it is just tapwater poured into a plastic container and
    (2) leachates from the pastic bottle are just as toxic as any ordinary water trace contaminants.

     

    Here on SA and elsewhere there is a whack job consortium who, tired of trying to prove we are running out of oil (natural gas, whatever) have moved on to a new bugaboo.
    26 Oct 2013, 10:36 AM Reply Like
  • BIG_BEN
    , contributor
    Comments (156) | Send Message
     
    Yeah i never understood the obsession with bottled water because of your first point. There is so much waste with all those disposable bottles of tap water not to mention the cost/gal is so much higher compared to DIY at home with a water filter.
    27 Oct 2013, 11:36 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    Big

     

    There have been cases where Tap water was contaminated as a result people in some area need to use bottled water. Twenty years ago. Milwaukee water supply was contaminated over 400,000 became sick and over 100 died.
    27 Oct 2013, 12:26 PM Reply Like
  • BIG_BEN
    , contributor
    Comments (156) | Send Message
     
    Not really sure what your point is. Any water source can become contaminated. There have been previous cases of contaminated bottled water and home RO filters remove the Cryptosporidium that caused the Milwaukee illness. I have also traveled to many countries where you have to boil the tap water to make it safe for consumption. That water can then be put in a reusable container. Sure there are uses for bottled water (such as disasters) but the daily waste of all those plastic bottles is unnecessary.
    27 Oct 2013, 01:16 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    BIG
    When your in NYC you have plenty of access to many forms of water.
    Here in Texas you should drive with bottled water in car because
    it could be a problem if you don't. A lot of roads have very few travelers between the rush hours. Trying to walk in 90 degree or higher temp should a car break down a few miles without water could cause an old folk like me real trouble.
    27 Oct 2013, 01:49 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    One interesting part I always liked was travelling to Rome and using the water fountains that have been there for hundreds to thousands of years. Kinda puts it all in perspective.
    27 Oct 2013, 04:57 PM Reply Like
  • BIG_BEN
    , contributor
    Comments (156) | Send Message
     
    Hah Derek. Just don't drink out of the fonts at all the churches. I read something recently that said the majority of Holy water had traces of ecoli in it.
    27 Oct 2013, 05:27 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    That must be why it is so effective against vampires lol
    27 Oct 2013, 08:45 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    An interesting study recently also claims that sugar free drinks can be problematic, with the hypothesis that, even though the sweeteners don't have the calorie load, the body still triggers an insulin response as if it were ingesting a sugary substance.

     

    We do take in way too much sugar in the US, now this lifestyle is being exported worldwide and countries like Mexico are feeling it.

     

    When I grew up soda was something you only had at special events every once in a while, not a staple to accompany an already high-calorie meal.

     

    Great point Gary, it still amazes me that bottled water is considered "healthier" than tap water and why people actually pay for it. (The whole point of it in a bottle was originally that you could move it around).

     

    Coke has a plant bottle made from sugar cane by-products now as well, hopefully should eliminate some of the BPA issues with the toxic leakage.

     

    That being said I am still long KO.
    26 Oct 2013, 11:00 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Most "sugar free" foods and drinks contain aspartame or sucralose or something similar -- basically sugar in a chemical form such that the seller isn't required to call it sugar or report its quantity on the nutritional label.

     

    And the (investing-related) point isn't the bottled water is healthier than tap water (though KO and others would love for you to believe that it is), it's that people are buying it more than they are buying the higher margin sugary stuff.
    26 Oct 2013, 04:59 PM Reply Like
  • Alex T
    , contributor
    Comments (291) | Send Message
     
    Have you ever drank Mexican Coke, it is sweeter than the US. Mexicans drink more Coke than anyone else in the world per capita, but their sugar is from Sugar cane. I was told the sugar is different from the regular sugar we have in US Coke.
    27 Oct 2013, 11:10 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    alex t

     

    you can get Mexican coke in Austin and San Antonio metro areas.
    27 Oct 2013, 11:21 PM Reply Like
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    Since when did Credit Suisse become a bank that you trust to run your decisions?
    From the same report, "“Although causality is difficult to prove in this area, with such a high percentage of doctors in our proprietary survey confident of this strong link, we cannot ignore the significance and the implications for society and our economy,” said Stefano Natella, co-head of securities research & analytics and an author of the study."
    What doctors did they interview in their proprietary survey? I'm sure people in Europe are highly skeptical of anything this bank says.
    26 Oct 2013, 11:05 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    momintn

     

    your comment
    I'm sure people in Europe are highly skeptical of anything this bank says.
    your 180 degrees wrong.
    For most in Europe their decrees are treated like the word of the wealth god.
    26 Oct 2013, 12:44 PM Reply Like
  • LYogi
    , contributor
    Comments (2413) | Send Message
     
    BAN the white poison
    26 Oct 2013, 11:16 AM Reply Like
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    "New Evidence for Role of Specific Virus Causing Type 1 Diabetes
    Oct. 22, 2013 — Type 1 diabetes is a disease caused by the destruction of the insulin-producing cells in the pancreas. It is often diagnosed in childhood and requires life-long treatment with daily insulin injections. It is associated with an increased risk for long-term complications which decrease the quality of life and average life-expectancy.
    Currently around 15 million people in the world are affected by this disease, and the number of new cases is rapidly increasing. This rapid increase over the last decades indicates that environmental factors must play an important role in the disease process. Viral infections have been among one of the suspected factors, since many viruses cause diabetes in animals by damaging the insulin-producing cells in the pancreas. Some of them have also been linked to human type 1 diabetes raising the possibility of developing vaccines against these viruses to prevent some of the new cases of type 1 diabetes."
    http://bit.ly/H91dQ7
    26 Oct 2013, 11:19 AM Reply Like
  • Momintn
    , contributor
    Comments (4782) | Send Message
     
    Genetics of diabetes.
    http://bit.ly/H91Nxc
    26 Oct 2013, 11:25 AM Reply Like
  • njja
    , contributor
    Comments (246) | Send Message
     
    More nonsense designed to control people's lives. In my opinion sugar is a natural product and when consumed in a modest amount should certainly be better for the average person then a chemical substitute.
    The key should be teaching people that moderation is the key, and that doing anything in excess is not good for you.
    The problem we have is a lack of credibility from the so called "experts" since what is good for us seems to change as the wind blows.
    26 Oct 2013, 12:35 PM Reply Like
  • LYogi
    , contributor
    Comments (2413) | Send Message
     
    if you think sugar is a natural product you have no clue what you speak about.

     

    Sugar cane is natural. It takes 3 feet of sugar cane and ten (10!) chemical processes to make a TEASPOON of sugar.

     

    Eating refined sugar is like nuking your body and it should be outlawed across the planet.

     

    Want to eat something sweet? try a banana or apple.
    26 Oct 2013, 01:42 PM Reply Like
  • rasanders22
    , contributor
    Comments (580) | Send Message
     
    How about we outlaw people telling other people what they can and can't do with their bodies.
    26 Oct 2013, 03:01 PM Reply Like
  • LYogi
    , contributor
    Comments (2413) | Send Message
     
    sure just don't expect me to pay for their health care.
    26 Oct 2013, 04:21 PM Reply Like
  • njja
    , contributor
    Comments (246) | Send Message
     
    Sorry that I am not an expert in extracting sugar from sugar cane.
    Since sugar cane by your own admission is natural, sugar itself has to be better in moderation for people then chemical substitutes created in a lab to be a cheaper alternative.
    27 Oct 2013, 11:21 AM Reply Like
  • LYogi
    , contributor
    Comments (2413) | Send Message
     
    I agree with you there, artificial sweeteners are the absolute worst.
    27 Oct 2013, 11:25 AM Reply Like
  • mherbr
    , contributor
    Comments (2) | Send Message
     
    Cheers!!!
    28 Oct 2013, 02:27 AM Reply Like
  • The Delivery Guy
    , contributor
    Comments (147) | Send Message
     
    Deal DEAL DEAL!, you stop telling me what to do, and I'll stop paying for your healthcare.
    28 Oct 2013, 12:08 PM Reply Like
  • rasanders22
    , contributor
    Comments (580) | Send Message
     
    You don't pay for my healthcare. My employer has a very good health insurance program.
    29 Oct 2013, 01:38 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    We (you included) pay to subsidize the emergency room visits of all the fat slobs having heart attacks because they ingest the equivalent of 50 teaspoons of processed sugar every day.

     

    Perhaps you could get one of those medic alert style bracelets and have it say that no one is allowed to spend any money on your healthcare until they validate your insurance and get approval from your insurer? That would make the rest of us feel better about you doing whatever you want with your body.

     

    By the way, does this notion of yours of not telling people what they can and can't do with their bodies extend to abortion? Drugs? Sex changes? How consistent are you with your beliefs? :-)
    29 Oct 2013, 07:59 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    rasanders22

     

    Unfortunately in a few years that may not continue. For many big companies the employer mandates might cause that problem
    29 Oct 2013, 08:02 AM Reply Like
  • LYogi
    , contributor
    Comments (2413) | Send Message
     
    obviously you don't understand the concept of insurance
    29 Oct 2013, 09:16 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2763) | Send Message
     
    LYOGI
    OBVIOUSLY. You can't comprehend. What part of the concept of insurance did I speak to other than infer the rules for corporations
    may become too expensive?
    29 Oct 2013, 11:20 AM Reply Like
  • sethmcs
    , contributor
    Comments (3423) | Send Message
     
    I hate soda and am too cheap to buy bottle water. Drink tea and milk.
    26 Oct 2013, 02:45 PM Reply Like
  • al roman
    , contributor
    Comments (9717) | Send Message
     
    Tap water is good enough.
    29 Oct 2013, 09:21 AM Reply Like
  • Patent News
    , contributor
    Comments (1406) | Send Message
     
    to each their own.

     

    government in the US and many other countries will not solve the obesity epidemic.

     

    as a person whom lost lots of weight and kept it off, it was not government.

     

    it was constant care to proper diet and fitness.

     

    to each their own.
    26 Oct 2013, 03:42 PM Reply Like
  • 9895461
    , contributor
    Comments (91) | Send Message
     
    Exactly.
    Myself - 3 years and 50 pounds ago. In my 40's and at my high school weight now.
    Have a can or 2 of Pepsi Throwback every week. Not every day.
    29 Oct 2013, 12:29 PM Reply Like
  • Jacob Steinberg
    , contributor
    Comments (814) | Send Message
     
    While there is no link between Type I diabetes and sugar consumption, the link between sugar consumption and Type II diabetes is well-documented. Sugar is one of the worst things we consume everyday and there is no question to it. Look up Robert Lustig and some of his research for more information. The guy makes compelling arguments.
    26 Oct 2013, 05:41 PM Reply Like
  • nickkoto
    , contributor
    Comments (70) | Send Message
     
    "Coca-Cola (KO) and Pepsi (PEP) have obviously noticed and cary their own bottled water lines, but these are low margin."

     

    Is filtered tap water in a 16oz Dasani bottle really a lower margin item than a 16oz bottle of Coke? I have a hard time believing that. They sell for the same price, but Dasani has a much simpler (and I would think cheaper) ingredient list.
    27 Oct 2013, 12:33 AM Reply Like
  • chopchop0
    , contributor
    Comments (3876) | Send Message
     
    Doesn't carry the same price outside of perhaps a single unit sale. Ever seen what a twelve pack or case of water goes for at the grocery store?
    27 Oct 2013, 08:45 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Also, markets like restaurants don't sell much bottled water (except for higher end restaurants), but they sell a ton of soda.
    27 Oct 2013, 10:16 AM Reply Like
  • nickkoto
    , contributor
    Comments (70) | Send Message
     
    Volume =/= margin
    28 Oct 2013, 03:15 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    No but it is highly correlated to profit, especially when, for many restaurants, the volume of bottled water is zero, but the volume of soda is, shall we say, morbidly obese.
    28 Oct 2013, 03:22 PM Reply Like
  • al roman
    , contributor
    Comments (9717) | Send Message
     
    Diet,exercise,awareness & prevention is key.
    27 Oct 2013, 06:50 AM Reply Like
  • jammerculture
    , contributor
    Comments (402) | Send Message
     
    All nutrition coments aside (this is an investing website), there is a clear trend of sugar, and sugary productsfollowing the path tobacco did. A smart investor should acknowledge this.
    27 Oct 2013, 02:25 PM Reply Like
  • chopchop0
    , contributor
    Comments (3876) | Send Message
     
    Tobacco investments however have somehow stayed more lucrative. A testament to the power of how addictive those products are compared to soda.
    27 Oct 2013, 03:55 PM Reply Like
  • Alex T
    , contributor
    Comments (291) | Send Message
     
    Chopchop: Good point and tobacco usage is not decreasing.
    27 Oct 2013, 11:14 PM Reply Like
  • ConservativeOutperformer
    , contributor
    Comments (602) | Send Message
     
    Who cares about all the other stuff? Anyone with their eyes open can acknowledge that KO is in trouble long term in the US. People don't drink it like they used to...

     

    KO might grow nicely outside of the US for many years. But, it won't mean much for those long the stock if they sell just as much (or less, which looks increasingly likely) in 10 years as they do today in their most profitable market..... it's a fantastic business model. But it doesn't matter if the valuation is relatively high given the business outlook...

     

    Good luck!
    27 Oct 2013, 05:20 PM Reply Like
  • RayZfox
    , contributor
    Comments (34) | Send Message
     
    "Coca-Cola (KO) and Pepsi (PEP) have obviously noticed and carry their own bottled water lines, but these are low margin"
    Hopefully the bottled water has a better margin than the soft drink.
    28 Oct 2013, 02:28 AM Reply Like
  • 9895461
    , contributor
    Comments (91) | Send Message
     
    Forget the white stuff. As a beekeeper I prefer a teaspoon of raw honey! :)
    29 Oct 2013, 12:30 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Me too. Hey 989, I read that some companies are allowed to label high fructose corn syrup as honey.

     

    So I only get the raw stuff, do you know anything about that?

     

    Nerd fact: honey is still usable after thousands of years as found in Egyptian tombs. (Although doubt anyone has tried to eat it).
    29 Oct 2013, 12:51 PM Reply Like
  • 9895461
    , contributor
    Comments (91) | Send Message
     
    I haven't heard that. I do know some stores sell the imitation garbage right along side the real stuff.
    31 Oct 2013, 07:50 AM Reply Like
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